The collapse of the auto industry – Are the unions to blame?
According to the Indianapolis Star, in the year ending 2007, the median base wage for a GM blue-collar employee was just under $28 an hour. GM officials say the average is $39.68 an hour, when base pay, cost-of-living adjustments, night shift premiums, overtime, holidays and vacations are factored in. Health care, pension and other benefits average another $33.58 an hour. This brings the total average cost of employing a single GM worker to a staggering $73.26 per hour.
Compare these outrageous hourly numbers to our Mexican counterparts. In June 2008, Ford Motor Company announced that its union had agreed to reduce the wages of new hires to approximately half of the current wage of $4.50 per hour. Starting wages at some plants in Mexico are as paltry as $1.50 an hour with much less than the related pension and health care costs of American workers. The total cost of employing a worker in China is even less than the cost in Mexico. No need to dissect those numbers, as I think the point has been made pretty clear.
The entire North American auto industry is on the verge of collapse and we wonder how this can happen. The answer is quite obvious. North America simply cannot compete with foreign automakers. Certainly not at these hourly labor rates. Unions have been holding a knife to manufacturers’ throats for far too long. Greed in its purest form has broken the back of the auto industry. The Union has no regrets, as they have already spoken out and declared that they refuse to make any kind of concessions, even during the industry’s darkest hour.
The leadership on behalf of the Union is largely responsible. Cattle herders, if you will, who advise and direct their herd to fight to the end to get what they want. They have no regard for the economics of their demands. His stance has consistently been, give us what we want or we’ll take our ball and go home. In other words, they will go on strike. Once again, holding the host of the industry.
The Big Three talking heads have asked Congress to kindly hand over $25 billion of taxpayer money to help solve this crisis. Although this is a staggering number, it is certainly not the saving grace that the auto industry requires. A Band-Aid on a gunshot wound won’t stop the bleeding. Without becoming more competitive with foreign markets, the auto sector will gradually revert to the funk it is in today.
Congress, it seems, is negotiating with the wrong people. They need to sit down with the United Auto Workers and give them a simple ultimatum. Either accept some very deep cuts not only in your wages but also in your benefits and pension or the Government will break up the Union and start over. Then, and only then, should the Government consider providing financial assistance to this troubled industry. Hard, maybe, absolutely necessary. I’m sure there are enough people currently on unemployment and welfare who would be happy to work in this industry for $15 an hour with limited benefits and a small pension program. And let’s face it, most of these positions require the intelligence and dexterity of a monkey, so the supply pool should be quite large considering we have college graduates and computer programmers currently out of work.
The repercussions of a collapse of the North American auto industry are enormous. Imagine millions upon thousands of workers who no longer contribute to income tax, health care, pensions, or unemployment insurance. Instead, these same workers now become a burden on our society as they all rush to the unemployment line at once.
The US government has just bailed out the financial sector with a $250 billion payout. The collapse of the auto industry will result in a further collapse of the financial industry. Government think tanks must determine how many of these autoworkers are likely to lose their loans and mortgages if they find themselves suddenly unemployed. Those numbers will be staggering and the ransom money will disappear faster than a box of donuts at a cop dance. Of course, those of us who are still employed will foot the bill through higher taxes.
The management of these companies cannot escape unscathed either. Although they are a contributing factor to this financial crisis with their multi-million dollar salaries and corporate jets, the Union consumes much more money than the administration. However, it is time for these so-called brilliant CEOs to put down their Crackberrys, roll up their sleeves, and formulate a workable plan that can save North America from financial disaster. A plan that not only includes drastic cuts throughout the company, but a plan that will make this industry competitive with other world markets.
Our Nation cannot withstand a collapse of the auto industry. The impacts are so great and the trickle-down effects so numerous that it would be almost impossible to assess the total devastation. It is essential that we resolve this crisis. The government must hold the union leaders and CEOs of these failing companies accountable. Most importantly, we the people must hold our governments accountable. After all, they are the ones giving away our hard-earned money to these failing companies.
